Getting a new hockey team up and running in the GTA could cost more than a billion dollars.

Toronto is rumoured to be one of the cities that might gain a team in the next round of NHL expansion.

By:Richard C. Powers Published on Sat Aug 30 2014

This past week, news has been circulating about the possibility of the NHL expanding, adding another four teams by 2017 as part of its 100th anniversary celebrations. To be sure, the league is in fine shape, thanks to a strong collective bargaining agreement and a 12-year, $5.2-billion broadcasting deal with Rogers. And while there has been talk of expansion on and off for several years, relocations have been the norm since the NHL’s last expansion to its current 30-team roster in the 2000-2001 season when Columbus and Minnesota were added. So the timing seems good — the question now is where?

What gives the notion that expansion is indeed on commissioner Gary Bettman’s agenda some credence is the source of this week’s news. Howard Bloom of Sports Business News broke the story and he is usually right on the money, and certainly not one to exaggerate or opine carelessly about such matters. According to Bloom, Las Vegas and Seattle are in the mix, as well as Quebec City and Toronto.

Quebec City is in the midst of constructing a new arena and it is no secret that they are doing so in the hopes of bringing back an NHL franchise to the city. Tim Leiweke, the soon-to-be-departing CEO of Maple Leaf Sports and Entertainment stated last year that the NHL “owes” Quebec City after relocating the Nordiques to Denver in 1995. Think of Winnipeg and the Jets as a comparison.

Seattle and Las Vegas make sense, if only to better align the western and eastern conferences, which now have 14 and 16 teams respectively.

Which brings us to Toronto. I don’t think there is much question as to whether Toronto could support a second NHL team. And there are other factors that now make this idea a lot more palatable than it was previously. The first is the new ownership of MLSE. With Rogers and Bell each owning 37.5 per cent of the business, they would welcome another franchise to bolster their programming. The battleground is around content, and another team adds 82 games to a broadcast schedule, more than enough to satisfy the incumbents. Combined the networks have 11 sports channels and with the move to other platforms that increased content becomes even more valuable.

In addition, the expansion fees would generate approximately $1.6 billion for the NHL owners, and there is talk of further payments to MLSE to satisfy their territorial concerns. The Leafs have long claimed that they have a veto on another club entering their “territory.” The league disputes this but the issue has never been resolved or clearly explained, mainly because it has never been in the interests of either side to bring it to a head. And there was no need to, until now perhaps. Regardless, the owners and MLSE win big with any sort of expansion, and this money is for the owners alone. It is not hockey-related revenue as defined in the collective bargaining agreement, therefore it would not be shared with the players.

There is, unfortunately, one very important consideration that probably makes Toronto a no-go for expansion. The cost would be prohibitive. In addition to the expansion fees of approximately $400 million, there is the cost of building another arena. The Toronto Star has suggested this would probably be another $400 million. And assuming that the Leafs do have a veto, the Star suggested that a territorial fee representing the lost value to MLSE could cost another $250 million. That is more than a billion dollars just to get started. Are there deep-pocketed, hockey-mad individuals looking for an investment opportunity to make this happen? Sure there are, but the emphasis is on “mad.” Other than the ego bump, it is unlikely that they would see an adequate return on their investment in their lifetime.

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